The operating cost for a digital telephony network is relatively easy to determine when the network operator implements the network at the physical layer. The total cost is the sum of the cost of the hardware and the cost of the link. The cost of the hardware (e.g., switches, routers, or multiplexers) is a combination of the depreciated value of the hardware purchase price and the hardware maintenance charges. The cost of the link depends on whether the network operator leases or owns the trunk lines. If the network operator leases the lines, the cost of the link is the sum of the monthly lease rate for the line. If the network operator owns the lines, the cost of the link is the depreciated purchase price of the line.
A Virtual Private Network (VPN) shares resources, such as the facilities of a public network, with other virtual private networks. The VPN maintains privacy by encapsulating the VPN messages in packets or frame relay frames to separate the messages from those of other VPNs that share the same public network. Tunneling involves the process of using encapsulation to carry one protocol over another. Encrypting the messages in the packets can further enhance the privacy of the VPN messages. Additional discussion of virtual private networks is provided in the book by David E. McDysan entitled “VPN Applications Guide”, published by John Wiley & Sons, 2000.
Replacement of the physical links with Virtual Circuits is a subsequent advance in technology that allows a telephony service provider to easily construct a network. A Permanent Virtual Circuit (PVC) uses a fixed logical channel to maintain a permanent association between data terminals. Since PVCs do not require a setup operation before sending data nor a disconnect operation after sending data, a new connection between the same users may route messages along a different path. The Virtual Circuits derive bandwidth from multiplexers using Time Division Multiplexing or by connections through a Frame Relay or Asynchronous Transfer Mode (ATM) switch. The latter case usually involves a published tariff, such as, the cost to maintain the physical network connection, set-up fees, teardown fees, or usage fees. There are various ways to optimize a Permanent Virtual Circuit (PVC) such as by sharing a single access line. The total cost to operate the network, however, is still relatively easy to determine.
Recent technology advances allow a telephony service provider to construct a Virtual Private Network (VPN) that does not include any PVCs. Instead, each node in the network has a Committed Access Rate (CAR) for ingress and egress traffic. The network does not require a destination for the traffic, but the traffic must remain within the VPN. As long as the traffic obeys the flow rate limitations specified by the CAR, the node will maintain a certain quality of service, that is, loss and delay.
Multi-Protocol Label Switching (MPLS) is an emerging Internet Engineering Task Force (IETF) standard for constructing a data packet transit network. An MPLS network moves data packets from an ingress node to an egress node and relies upon conventional routers using legacy Local Area Network techniques to deliver the data packets to the end systems. In the MPLS network protocol, each incoming packet includes a label that has an appearance similar to a packet header. As the packets traverse the label switch path, each node along that path makes a forwarding decision for the packet based solely on the contents of the label. As each node forwards a packet, the network strips the existing label from the message and adds a new label that provides forwarding instructions for the next node on the label switch path. The MPLS standard, dated Aug. 10, 2000, is available on the IETF Web site at http://www.ietforg/internet-drafts/draft-ietf-mpls-arch-07.txt. Additional discussion of MPLS is provided in the book by Bruce S. Davie et al., entitled “MPLS: Technology and Applications”, published by Morgan Kaufmann Publishers, 2000.
MPLS enables the creation of “virtual circuits”, or tunnels, across an Internet Protocol (IP) network. These virtual circuits make is possible to use MPLS to provision VPN services such as traffic engineering. Using MPLS for a VPN provides traffic isolation, much like an Asynchronous Transfer Mode (ATM) or frame relay service. A description of a method for applying using MPLS to provision a VPN on an IP network is available as a Request For Comment (RFC) document on the IETF Web site at http://www.ietf.org/rfc/rfc2547.txt.
In a MPLS VPN, there is a committed access rate (CAR) for both the inbound and outbound traffic from each site. The destination of this traffic is unspecified, but the traffic must remain within the VPN. The VPN customer contracts for VPN service within the limits specified by the CAR. The provider of the VPN on a public network must price this service to meet the competitive conditions of the market place and to recover the provider's investment in the infrastructure of the network. The problem to solve is to develop a way to establish a price for the bandwidth that each VPN customer uses, knowing only the access rates, not the destination of the traffic.